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Ruling

Subject: Flood levy exemption

Question

Are you required to pay the Temporary Flood and Cyclone Reconstruction Levy (the flood levy) if your taxable income for the year ended 30 June 2012 exceeds $50,000?

Answer

No.

This ruling applies for the following period

Year ending 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You were affected by an NDRRA declared natural disaster.

As a result of the natural disaster you were without an essential service for more than 48 hours.

You did not receive an Australian Government Disaster Relief Payment (ADGRP) as you applied after the cut-off date.

Relevant legislative provisions

Income Tax (Transitional Provisions) Act 1997 Section 4-10

Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemptions 2011 Schedule 1

Reasons for decision

Summary

As you were without an essential service for more than 48 hours you meet the criteria for an exemption from the flood levy.

Detailed reasoning

The Australian Government has introduced the flood levy for the financial year ended 30 June 2012. The flood levy is designed to assist affected communities to recover from the recent natural disasters by providing additional funding to rebuild essential infrastructure, such as, roads, bridges and schools.

Section 4-10 of the Income Tax (Transitional Provisions) Act 1997 states you must pay the flood levy where your taxable income for the 2011-12 financial year exceeds $50,000 unless you are covered by the exemption provision. The flood levy is an additional amount to the normal income tax calculated on your taxable income.

The exemption provision requires the Minister to specify the classes of individuals in a legislative instrument who are not required to pay the levy. As stated in the legislative instrument Income Tax - Temporary Flood and Cyclone Reconstruction Levy Exemption 2011, you are not required to pay the levy if you are a member of one of the three exemption classes described below:

· Class 1 - you were eligible for an AGDRP for a natural disaster that occurred during the 2010-11 or 2011-12 financial year and you received the payment by 30 June 2012

· Class 2 - you were affected by:

· an event that occurred during the 2010-11 or 2011-12 financial year which was declared as a natural disaster under the Natural Disaster Relief and Recovery Arrangements (NDRRA), and

· you were at least 16 years old at the time of the disaster, and

· you were an Australian resident for social security reasons at the time of the disaster, and

· at least one of the following conditions applies:

· as a direct result of the natural disaster:

· you were seriously injured, or

· an Australian was killed and that Australian was an immediate member of your family, or

· your principal place of residence was destroyed or sustained major damage, or

· you were unable to gain access to your principal place of residence for at least 24 hours, or

· you were stranded in your principal place of residence for at least 24 hours, or

· as a result of the natural disaster, your principal place of residence was without electricity, water, gas, sewerage service or another essential service for at least 48 hours, or

· you were the principal carer of a child (within the meaning of the Social Security Act 1991) to whom sub-paragraph (i) or (ii) applies.

· Class 3 - you are a New Zealand citizen who received an ex-gratia payment from Centrelink by 30 June 2012 for a natural disaster that occurred in the 2010-11 or 2011-12 financial year.

Application to your circumstances

You were affected by an NDRRA declared natural disaster.

As a result of the natural disaster your principal place of residence was without an essential service for at least 48 hours.

You are exempt from paying the flood levy as you meet the conditions for a Class 2 exemption. That is, you were affected by a natural disaster, are an Australian resident for social security purposes aged over 16 years of age and your principal place of residence was without an essential service for at least 48 hours.

Accordingly, you will not be liable to pay the flood levy for the 2011-12 financial year.

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